ISLAMABAD: Reviving hopes of CNG users, the government on Thursday decided to divert a part of liquefied natural gas (LNG) expected to be imported next year to transport sector.

The decision was taken at a meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Finance Minister Ishaq Dar. The committee referred a new policy about Liquefied Petroleum Gas (LPG) pricing to the Council of Common Interest (CCI) and disagreed to divert more natural gas to textile industry in given circumstances.

Also read: Hurdles in LNG import removed

Informed sources said the ECC approved in principle the allocation of about 200 mmcfd of imported LNG for CNG sector on the request of All Pakistan CNG Association (APCNGA) to ease its difficulties particularly in Punjab as a quid pro quo. In return, the CNG industry would give up 22 mmcfd of natural gas it was currently getting from Sui Northern Gas Pipelines Limited (SNGPL) for utilisation in some other important area.

The APCNGA had agreed to the new arrangement provided the government curtailed GST and exempted LNG use in CNG sector from Gas Infrastructure Development Cess (GIDC) to ensure CNG price was about 35 per cent lower than petrol.

While the GIDC had already been struck down by the Supreme Court, the ECC constituted a committee comprising secretaries of finance and petroleum and chairman FBR to examine the fiscal impact in case LNG to CNG was subjected to a reduced rate.

Under the scheme, the government would allocate capacity in the pipeline system for CNG and issue separate licence for LNG distribution. Informed sources said the CNG owners were already in talks with private parties for LNG import.

Until the LNG is supplied to CNG sector, the government has agreed to continue with existing supply arrangement under which 79 mmcfd of gas is supplied to CNG twice a week. As the LNG imports increase subsequently, additional gas allocations would be made across the country.

The APCNGA welcomed the decision saying it will revive CNG supply to vehicles seven days a week and protect hundreds of thousands of jobs besides providing cheaper fuel to millions of people.

The sources said the ministry of textile industry had requested to prioritise textile industry in supply of natural gas and electricity that could increase textile exports by $2 billion.

Minister for petroleum Shahid Khaqan Abbasi opposed the move saying the natural gas was not a basic raw material for textile industry which in fact utilised gas for power production in captive power plants.

He said the government’s priority in case of natural gas supply was domestic sector and if surplus gas becomes available it should be supplied to major power plants that could impact rising electricity tariff with benefits reaching wider section of society.

The finance minister asked the secretaries of petroleum and textile industry to look into the issue and report back.

The ECC also considered another summary on New Liquefied Petroleum Gas Production and Distribution Policy 2014 and directed that the matter be taken up with the CCI because that was the right forum under Article 154.

The ECC was informed that the country had enough stocks of wheat (6.916 million tonnes) and sugar (2.088 million tonnes) as per the latest figures of September 2014.

It was also informed that the country had been producing 15,207MW of electricity in July and the stock exchange had been robust and since May 2013, has registered 43 per cent growth in rupee terms and 38 per cent growth in dollar terms.

Published in Dawn, September 12th, 2014